An online article July 8, by oil and gas industry mouthpiece RIGZONE proclaims “SOUTH AFRICA EDGES CLOSER TO KAROO SHALE GAS DEVELOPMENT” Peppered with inaccuracies, and drawing on phrases like ‘rolling blackouts in South Africa in May of this year’, the article regurgitates the industry speculation that we have heard in this country since January 2011. Here is the article. My reply to RIGZONEon their own online comment section may not be published, and is set out underneath the RIGZONE article.

I believe that the article is poorly researched, and as one would expect biased towards the oil and gas industry that supports your publication. As proof, I mention just one point that jumps out of the text. ‘300 000 to 700 000 jobs over 25 years. (485tcf)’ Anyone who has done their homework knows that South African scientists long ago reduced that figure from 485 to 40tcf – so any estimates based on 485 are irrelevant – much like the industry hype and speculation over Monterey. No Sir, those backing shale mining in SA may feel that it is edging closer, but actually the news on shale gas globally is not good and is building a strong body of evidence against SA moving ahead under the current circumstances. Jonathan Deal, CEO, Treasure Karoo Action Group, South Africa.

“… the star of the North American show is barely on most people’s radar screens. California shale will… reinvigorate the Golden State’s economy over the next two to three years.”

The question that must be in most people’s mind now is how long will government leaders and captains of industry be fooled by the false claims of the oil and gas industry? – Jonathan Deal

Write-down of two-thirds of US shale oil explodes fracking myth

Industry’s over-inflated reserve estimates are unravelling, and with it the ‘American dream’ of oil independence

An oil field over the Monterey shale formation in California: 96% reserve downgrade undermines claims that fracking is solution to the world’s energy needs. Photograph: David McNew/Getty Images

Next month, the US Energy Information Administration (EIA) will publish a new estimate of US shale deposits set to deal a death-blow to industry hype about a new golden era of US energy independence by fracking unconventional oil and gas.

EIA officials told the Los Angeles Times that previous estimates of recoverable oil in the Monterey shale reserves in California of about 15.4 billion barrels were vastly overstated. The revised estimate, they said, will slash this amount by 96% to a puny 600 million barrels of oil.

The Monterey formation, previously believed to contain more than double the amount of oil estimated at the Bakken shale in North Dakota, and five times larger than the Eagle Ford shale in South Texas, was slated to add up to 2.8 million jobs by 2020 and boost government tax revenues by $24.6 billion a year.

Industry lobbyists have for long highlighted the Monterey shale reserves as the big game-changer for US oil and gas production. Nick Grealy, who runs the consultancy No Hot Air which is funded by “gas and associated companies”, and includes the UK’s most high-profile shale gas fracker Cuadrilla among its clients, predicted last year that:

“… the star of the North American show is barely on most people’s radar screens. California shale will… reinvigorate the Golden State’s economy over the next two to three years.”

This sort of hype triggered “a speculation boom among oil companies” according to the LA Times. The EIA’s original survey for the US Department of Energy published in 2011 had been contracted out to Intek Inc. That report found that the Monterey shale constituted “64 percent of the total shale oil resources” in the US.

The EIA’s revised estimate was based partly on analysis of actual output from wells where new fracking techniques had been applied. According to EIA petroleum analyst John Staub:

“From the information we’ve been able to gather, we’ve not seen evidence that oil extraction in this area is very productive using techniques like fracking… Our oil production estimates combined with a dearth of knowledge about geological differences among the oil fields led to erroneous predictions and estimates.”

The Intek Inc study for the EIA had relied largely on oil industry claims, rather than proper data. Hitesh Mohan, who authored the Intek study for the EIA, reportedly conceded that “his figures were derived from technical reports and presentations from oil companies, including Occidental Petroleum, which owns the lion’s share of oil leases in the Monterey Shale, at 1.6 million acres.” Mohan had even lifted his original estimate for the EIA to 17 billion barrels.

Geoscientist David Hughes, who worked for the Geological Survey of Canada for 32 years, said:

“The oil had always been a statistical fantasy. Left out of all the hoopla was the fact that the EIA’s estimate was little more than a back-of-the-envelope calculation.”

Last year, the Post Carbon Institute (PCI) published Hughes’ study,Drilling California: A Reality Check on the Monterey Shale, which conducted an empirical analysis of oil production data using a widely used industry database also relied on by the EIA. The report concluded that the original EIA estimate was “highly overstated,” and unlikely to lead to a “statewide economic boom…. California should consider its economic and energy future in the absence of an oil production boom.”

A spokesman for the Institute, Tod Brilliant, told me:

“Given the incredible difference between initial projections of 15 billion barrels and revisions to 600 million, does this not call into account all such global projections for tight oil?”

As I’d reported earlier in June last year, a wider PCI study by Hughes had come to similar conclusions about bullish estimates of US shale oil and gas potential, concluding that “light tight oil production in the USA will peak between 2015 and 2017, followed by a steep decline”, while shale gas production would likely peak next year. In that post, I’d pointed out previous well-documented, and alarmingly common, cases of industry over-estimates of reserve sizes which later had been questioned.

Analysts like Jeremy Leggett have said, citing exaggerated oil industry estimates, that if reserve and production reality are indeed significantly lower than industry forecasts, we could be at risk of an oil shock as early as within the next five years.

The latest revelations follow a spate of bad news for industry reassurances about the fracking boom. New research published this month has found that measured methane leaks from fracking operations were three times larger than forecasted. The US Environment Protection Agency therefore “significantly underestimates” methane emissions from fracking, by as much as a 100 to a 1,000 times according to a new Proceedings of the National Academy of Sciences study published in April.

The Associated Press also reported, citing a Government Accountability Office investigation, that the US Interior Department’s Bureau of Land Management had failed to adequately inspect thousands of oil and gas wells that are potentially high risk for water and environmental damage.

Despite the mounting evidence that the shale gas boom is heading for a bust, both economically and environmentally, both governments and industry are together pouring their eggs into a rather flimsy basket.

According to a secret trade memo obtained by the Huffington Post, the Obama administration and the European Union are pushing ahead with efforts to “expand US fracking, offshore oil drilling and natural gas exploration”, as well as exports to the EU, under the prospective Transatlantic Trade and Investment Partnership (TTIP) agreement.

The shale mining fraternity, still reeling from the release of a Scientific Report on the effect of shale gas mining – released by the Canadian Council of Academies has been dealt another blow with the news that the golden energy goose of California has been reduced by 96% – by the US Energy Information Administration. The industry and its proponents in government and commerce have long been warned about the overhyping of shale gas assets in the US. Even in South Africa, the original estimates by the USGS, of 485tcf have been downgraded by South Africa’s own scientists to a ‘best case extraction scenario of 40tcf.

U.S. officials cut estimate of recoverable Monterey Shale oil by 96%

Aaron Kent, a wireline operator for Canary, works on a slick line at an oil rig pump jack site in the oil fields near Bakersfield. Kern County has seen a flurry of activity because of the potential for development of the Monterey Shale formation. (Al Seib, Los Angeles Times)

The Monterey Shale formation contains about two-thirds of the nation’s shale oil reserves

An earlier estimate assumed Monterey Shale oil deposits were as easily recoverable as those found elsewhere

Federal energy authorities have slashed by 96% the estimated amount of recoverable oil buried in California’s vast Monterey Shale deposits, deflating its potential as a national “black gold mine” of petroleum.

Just 600 million barrels of oil can be extracted with existing technology, far below the 13.7 billion barrels once thought recoverable from the jumbled layers of subterranean rock spread across much of Central California, the U.S. Energy Information Administration said.

The new estimate, expected to be released publicly next month, is a blow to the nation’s oil future and to projections that an oil boom would bring as many as 2.8 million new jobs to California and boost tax revenue by $24.6 billion annually.

The Monterey Shale formation contains about two-thirds of the nation’s shale oil reserves. It had been seen as an enormous bonanza, reducing the nation’s need for foreign oil imports through the use of the latest in extraction techniques, including acid treatments, horizontal drilling and fracking.

The energy agency said the earlier estimate of recoverable oil, issued in 2011 by an independent firm under contract with the government, broadly assumed that deposits in the Monterey Shale formation were as easily recoverable as those found in shale formations elsewhere.

The estimate touched off a speculation boom among oil companies. The new findings seem certain to dampen that enthusiasm.

Kern County in particular has seen a flurry of oil activity since 2011, with most of the test wells drilled by independent exploratory companies. Major oil companies have expressed doubts for years about recovering much of the oil.

The problem lies with the geology of the Monterey Shale, a 1,750-mile formation running down the center of California roughly from Sacramento to the Los Angeles basin and including some coastal regions.

Unlike heavily fracked shale deposits in North Dakota and Texas, which are relatively even and layered like a cake, Monterey Shale has been folded and shattered by seismic activity, with the oil found at deeper strata.

The narrative of fracking in the Monterey Shale as necessary for energy independence just had a big hole blown in it.– Seth B. Shonkoff, executive director of the nonprofit Physicians Scientists & Engineers for Healthy Energy

Geologists have long known that the rich deposits existed but they were not thought recoverable until the price of oil rose and the industry developed acidization, which eats away rocks, and fracking, the process of injecting millions of gallons of water laced with sand and chemicals deep underground to crack shale formations.

The new analysis from the Energy Information Administration was based, in part, on a review of the output from wells where the new techniques were used.

“From the information we’ve been able to gather, we’ve not seen evidence that oil extraction in this area is very productive using techniques like fracking,” said John Staub, a petroleum exploration and production analyst who led the energy agency’s research.

“Our oil production estimates combined with a dearth of knowledge about geological differences among the oil fields led to erroneous predictions and estimates,” Staub said.

Compared with oil production from the Bakken Shale in North Dakota and the Eagle Ford Shale in Texas, “the Monterey formation is stagnant,” Staub said. He added that the potential for recovering the oil could rise if new technology is developed.

A spokesman for the oil industry expressed optimism that new techniques will eventually open up the Monterey formation.

“We have a lot of confidence in the intelligence and skill of our engineers and geologists to find ways to adapt,” said Tupper Hull, spokesman for the Western States Petroleum Assn. “As the technologies change, the production rates could also change dramatically.”

“The smart money is still investing in California oil and gas,” Zierman said.

“The oil is there,” Zierman said. “But this is a tough business.”

Environmental organizations welcomed the news as a turning point in what had been a rush to frack for oil in the Monterey formation.

“The narrative of fracking in the Monterey Shale as necessary for energy independence just had a big hole blown in it,” said Seth B. Shonkoff, executive director of the nonprofit Physicians Scientists & Engineers for Healthy Energy.

J. David Hughes, a geoscientist and spokesman for the nonprofit Post Carbon Institute, said the Monterey formation “was always mythical mother lode puffed up by the oil industry — it never existed.”

Hughes wrote in a report last year that “California should consider its economic and energy future in the absence of an oil production boom from the Monterey Shale.”

The 2011 estimate was done by the Virginia engineering firm Intek Inc.

Christopher Dean, senior associate at Intek, said Tuesday that the firm’s work “was very broad, giving the federal government its first shot at an estimate of recoverable oil in the Monterey Shale. They got more data over time and refined the estimate.”

For California, the analysis throws cold water on economic projections built upon Intek’s projections.

In 2013, a USC analysis, funded in part by the Western States Petroleum Assn., predicted that the Monterey Shale formation could, by 2020, boost California’s gross domestic product by 14%, add $24.6 billion per year in tax revenue and generate 2.8 million new jobs.

As the full report on fracking – issued by the Council of Canadian Academies was released, the oil and gas industry – quite predictably are running around trying to do damage control.

Typical industry response as in the quote from David Pryce of the Canadian Association of Petroleum Producers was “We would not agree with that. The fact that we’ve been in this business for decades in the natural gas business and 10 years in the business of hydraulic fracturing, we’ve got a great deal of experience in this place.”

The sheer audacity of such a statement in the face of this report can only be based on one underlying fact – they make their money out of oil and gas production. Of course they would not want to ‘agree’ with the report. Moreover, to make such a statement on the day that the full report is released suggests a careless arrogance, and begs the question:

“How can the Canadian Association of Petroleum Producers make a judgement call on a report that they have not yet even read through, let alone studied”?

Having downloaded the report (available here) I provide an excerpt detailing the scientists and specialists involved in authoring and releasing the report, as well as the reviewers and the final protocol observed in the compilation, review and release of the report. In my view, this is a substantial body of work that cannot be brushed aside by political leaders.

“The report should be viewed by the ANC and the organs of the South African Government charged with responsibility, or involved in any decisions on Minerals and Petroleum as a serious reason to step back from the euphoric rush to pursue shale gas mining in this country under the current circumstances.” – Jonathan Deal

HERE FOLLOWS THE NAMES AND QUALIFICATIONS OF THE EXPERT PANEL: [emphasis of specialisation added for ease of reference]

Expert Panel on Harnessing Science and Technology to Understand the Environmental Impacts of Shale Gas Extraction

John Cherry, FRSC (Chair), Director of the University Consortium for Field-Focused Groundwater Contamination Research, Associate Director of G360 – Centre for Applied Groundwater Research, and Adjunct Professor in the School of Engineering at the University of Guelph (Guelph, ON)

This list of specialists, and the openness with which the report has been treated is in direct contrast to the conduct of the South African Department of Minerals which conducted an insular and secret investigation, releasing a document to the South African Cabinet, which lead to that body authorising the Minister of Minerals to lift the moratorium on shale gas mining in South Africa, under the conclusion that ‘Shale gas mining can be done safely.” – Jonathan Deal

HERE FOLLOWS THE NAMES AND QUALIFICATIONS OF THE REVIEWERS AND THE PROTOCOL APPLIED:

“Report Review

This report was reviewed in draft form by the individuals listed below — a

group of reviewers selected by the Council of Canadian Academies for their

diverse perspectives, areas of expertise, and broad representation of academic,

Treasure Karoo Action Group

Environment and Energy

Media release

February 14 2014

IMMEDIATE RELEASE

US team facilitates SA fracking discussion

Stakeholders in the South African shale gas debate met in Pretoria, February 10 and 11 to consider the issues surrounding the advent of shale gas mining in South Africa. The workshop, hosted by the Departments of International Relations and Cooperation, Water Affairs and Environmental affairs provided a forum for stakeholders from government, industry and civil society to air their views on fracking under the Unconventional Gas Technical Engagement Program.

The US delegation, under the auspices of the US Department of Interior was headed up by Joseph Figueiredo of the Bureau of Energy Resources with support from the US Bureau of Land Management as well as the US Environmental Protection Agency and other US officials with knowledge of shale gas mining legislation and policy. Figueroa made it clear that the US delegation was not in SA to promote fracking but rather to assist by sharing experiences connected with the technology in the United States.

Representatives from Environment, Water Affairs, CSIR, Department of Science & Technology, Department of Minerals, Petroleum Agency of SA, amongst others, formed part of the SA government delegation. Royal Dutch Shell, Chevron, Baker Hughes, SRK Consulting, Sasol and others represented industry. Presentations on the Civil Society perspective were delivered by Centre for Environmental Rights (CER) and TKAG.

In an announcement in Johannesburg after the event, TKAG CEO Jonathan Deal said that the engagement was the most positive development that TKAG had experienced in more than three years of frustrating dialogue around fracking in South Africa. “Finally, we have a commitment from engaged government agencies to develop a strategic environmental assessment around the issue of shale gas mining. This is what we have been asking for since May of 2011.”

Complimenting the Department of Water Affairs for its proactive and accessible approach to the debate, Deal remarked “We can only hope that by some process of osmosis, the Department of Minerals will follow this example and engage appropriately with all of the stakeholders in this decision.” “In the light of this dialogue, we experience the seemingly uncoordinated announcements by Minister Shabangu (Mining Indaba and government Gazette) in connection to shale gas as perplexing. It will be a sad day if the DMR must be opposed by South African citizens in pursuit of their rights,” concluded Deal.

Meanwhile, the DMR published two notices in the Government Gazette, one inviting comment on placing a restriction on granting new reconnaissance, technical cooperation permits and exploration rights for the next two years and another notice, restricting licences that may be granted from applications received prior to February 2011 over a designated area, from using hydraulic fracturing in the exploration phase until the regulations around the process are finalised.

The engagement closed after the adoption of a set of principles presented by Prof Gregory Scott of DWA. Facilitator, Mr. Aniel Singh – Deputy Director General of Water Affairs stressed DWA’s commitment to continue the process with the inclusion of all stakeholders.

The survey has so far tracked changes in the awareness of shale gas, and what they believe to be the environmental impacts of its extraction and use as well as its acceptability as an energy source.

The prospect of the contamination of drinking water has been a key concern of the protestors, and the negative rating for shale gas on water contamination has increased from -10.5 per cent to -16.4 per cent in the January survey, reversing a declining trend seen between March 2012 and July 2013.

The same is true of whether respondents see shale gas as a “clean” form of energy overall, with the negative score for shale gas on this measure increasing from -9.9 per cent to -12.7 per cent between September 2013 and January 2014.

Professor Sarah O’Hara, from the School of Geography said: “Although respondents do see shale gas as a ‘cheap’ form of fuel, the trends have also moved away from shale on this indicator which in July 2013 stood at +33.4 per cent, but had fallen to +26.3 per cent in September and is now +22.7 per cent.

“This suggests that the ‘turn against fracking’ indicated in September was not a ‘blip’ and may represent an increasing sense of unease with the environmental implications of fracking techniques amongst the UK public.”

Last July there was a 39.5 per cent differential in favour of shale gas extraction but this has been pared back to +26.7 per cent in January 2014.

For the first time, the survey asked the public what they thought of the proposal that energy companies pay a ‘community benefits’ charge to local communities where fracking takes place.

The majority of people thought that the payments would be to ‘get the community’s support for fracking in their area’ rather than to bring ‘benefits’ to the community, which may indicate that such payments are seen above all as a means of ‘buying off’ potential local opposition.

Professor O’Hara adds: “The January survey confirms that after a prolonged period where the UK public appeared to be warming to shale gas, that opinion is now shifting in the opposite direction.

“It is also interesting to see that the public are not convinced that the payment of compensation to communities in areas where fracking will take place represents a community benefit, but more an attempt to ‘get the community’s support for fracking in their area’, which may signal that payments such as these could be seen as a means of ‘buying off’ potential opposition.

“In which case, this is a strategy in need of review.”

Professor Matthew Humphrey added: “These figures may reflect the increasing politicisation of fracking and shale gas as a contentious issue in UK public policy.

“The public is getting strong messages from protest groups about the dangers of fracking and an equally strong message from the government about the benefits it will bring in terms of secure and affordable energy.